It is striking that both the evil empire solution (Microsoft 365) and the underdog disruptive upstart (Google Docs, at least that’s what it was ~15 years ago) are both American companies. iWork is American, Zoho is Indian.
Why aren’t Europeans producing competitive software?
The problem with the MS products is a different one.
All authorities and almost all business are in tight vendor lock-in when it comes to US software. That's a powerful factor. You can't escape 30+ years of grown lock-in without "insane" investments.
The second factor is of course the corruption all across the EU and its authorities.
Ever heard the story of Munich's switch to Linux and than back to MS? "By chance" MS built its German headquarter in Munich right after that… (Of course hundreds of millions of Euros where in play there). And the sister of one of the lead politicians behind that is "by chance" working for MS in a high management role. There are also known buddy connections between the ex mayor of Munich and MS.
And that's just the tip of the iceberg.
They absolutely do;
https://en.wikipedia.org/wiki/SAP
https://en.wikipedia.org/wiki/DeepL_Translator
https://en.wikipedia.org/wiki/TeamViewer_(company)
https://en.wikipedia.org/wiki/Lufthansa_Systems
Just 4 examples from Germany. There are countless software companies in Europe, and not just western...eastern Europe is going big in IT in some areas as well. The ability is certainly there.
As to why that didn't (yet) result in good EU-centric alternatives to some of the big US providers in certain areas of IT...good question. I think the correct answer will be a mix of startup culture, government appreciation for the topics importance, convenience of existing solutions, marketing, and several other topics. Certainly not an easy question to give an answer to.
Back before Gmail ate the world there were a number of small “mail server with webmail” in a box setups - those mostly died off. Similar things happened with office suites.
